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Bally Company has three productlines: A, B and C. The following annual information isavailable: Product A Product B Product C Sales $60,000 $90,000 $24,000 Variable
Bally Company has three productlines: A, B and C. The following annual information isavailable:
Product A Product B Product C
Sales $60,000 $90,000 $24,000
Variable costs 36,000 48,000 20,000
Contribution margin 24,000 42,000 4,000
Avoidable fixed costs 9,000 18,000 3,000
Unavoidable fixed costs 6,000 9,000 2,400
Operatingincome(loss)$9,000 $15,000 $(1,400)
Assume Bally Company drops Product C. What will happen to operatingincome?
A.
decrease by$1,000
B.
increase by$3,800
C.
decrease$1,400
D.
increase by$1,400
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